AstraZeneca offloading US 'Synagis' rights to Sobi in huge transaction

By Josh White

Date: Tuesday 13 Nov 2018

(Sharecast News) - AstraZeneca has agreed to sell the US rights to 'Synagis' (palivizumab), used for the prevention of serious lower respiratory tract infection (LRTI) caused by respiratory syncytial virus (RSV), to Swedish Orphan Biovitrum, trading as Sobi.The FTSE 100 pharmaceuticals giant said Sobi would commercialise Synagis in the US, with around 130 AstraZeneca employees to transfer to Sobi as part of the transaction.

Sobi would also have the right to participate in AstraZeneca's share of US profits and losses related to potential new medicine MEDI8897.

AstraZeneca would continue to develop MEDI8897 in collaboration with Sanofi Pasteur, the vaccines division of Sanofi.

Under the agreement, AstraZeneca will receive an upfront consideration of $1.5bn, consisting of $1.0bn in cash and $500m in ordinary shares of Sobi upon completion.

That would equate to an ownership interest of 8%, based on the current Sobi share price.

AstraZeneca had undertaken not to sell the shares received as consideration for a period of 12 months following the closing date of the transaction, with the cash proceeds from the transaction to be used for general corporate purposes.

AstraZeneca said it would also receive up to $470m in sales-related payments for Synagis, a $175m milestone following the submission of the Biologics License Application for MEDI8897; potential net payments of approximately $110m on achievement of other MEDI8897 profit and development-related milestones; and a total of $60m in non-contingent payments for MEDI8897 during 2019-2021.

Under the agreement, Sobi would have the right to participate in payments that may be received by AstraZeneca from the US profits or losses for MEDI8897.

The agreement remained subject to customary closing conditions, and was currently expected to complete "very early" in 2019.

AstraZeneca said it would provide additional information if closing conditions were achieved earlier, and the agreement could complete late in 2018.

Net income attributable to the arrangements would be recorded in the company's financial statements upon completion as other operating income.

As part of the agreement, AstraZeneca said it would de-recognise on a proportionate basis a "significant" intangible asset related to Synagis.

The transaction would not impact the firm's financial guidance for 2018.

"We continue to streamline our portfolio, allowing AstraZeneca to allocate resources more effectively, while Sobi's focus on Synagis will enable infants in the US to continue benefiting from this important treatment," said AstraZeneca chief executive officer Pascal Soriot.

"Meanwhile, the successful development and commercialisation of MEDI8897 remains important for AstraZeneca."

Sobi president and CEO Guido Oelkers added that he was "excited" about adding Synagis to the company's portfolio, saying it remained the only product preventing RSV infection in such a vulnerable patient group with a "great" medical need.

"The addition of Synagis will become an important catalyst for Sobi's future development and will form a powerful platform for growth in rare diseases," Oelkers explained.